"I think that Wall Street analysts are going to be very impressed with Coinbase's financials."
Polychain CEO Olaf Carlson-Wee is referring to Coinbase's much-anticipated initial public offering. Carlson-Wee, who was Coinbase's first employee, told The Block during a recent episode of The Scoop that the IPO will add a stamp of legitimacy to the entire crypto market.
"This isn't a pre-revenue, social media company," he said. "This is a real hardcore financial services business with hundreds of millions of dollars in revenue."
Coinbase, which derives most of its revenues from fees tied to trading, recorded more than $83 billion in volumes this month — the highest ever, according to data compiled by The Block Research.
"Even if you don't get bitcoin, you don't get crypto-assets ... you get what a business is and you understand that Coinbase is a very good one," Carlson-Wee said. He went on:
"It is a very big business. It has grown very fast. And it has real lasting power and real moats and everything. You can't ignore it, right, if you are in the traditional financial sector. It is one thing you can't just brush off as 'oh, that's all just hot air' as many people have said about bitcoin."
Although bitcoin has become more accepted as an asset-class this year among institutional investors like Anthony Scaramucci and Paul Tudor Jones, it still has its fair share of detractors. UBS recently said that cryptocurrencies like bitcoin don't work as currencies, while Barclays said that bitcoin is "almost uninvestable."
Still, interest appears to be growing in Coinbase. Goldman Sachs has lined up to serve as Coinbase's lead investment banker for the transaction, according to a December report by Reuters. Data from The Block Research shows that the firm is being valued above $66.9 billion in a pre-IPO futures market operated by FTX. At last check, those contracts are trading at $267.
"I do think for good companies that have sustainable business models/proof of concept there will be strong demand," said Devin Ryan, equity research analyst at JMP Securities, referring to the institutional interest in crypto IPOs. "Institutional capital will differentiate among the players - some players will be more favored, but investment demand is increasing and the amount of time we are spending talking to institutional clients on the space is up materially in recent months."
A valuation above $60 billion would have placed Coinbase among the top IPOs of 2020.
Listen to the full conversation with Polychain's Olaf Carlson-Wee below.